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The Vital Role of Agencies in Mitigating Issues Arising from Mandatory Bilateral Arbitration

The Vital Role of Agencies in Mitigating Issues Arising from Mandatory Bilateral Arbitration


The civil justice system has been deemed threatened by mandatory arbitration provisions since they force private arbitrators to settle issues and frequently prevent customers, employees, and other parties from utilizing class action lawsuits. This has prompted requests that courts and the US Supreme Court, at the very least, decline to uphold arbitration agreements. However, it moves the emphasis from the courts to federal administrative authorities, which may be able to help resolve some of the problems brought up by arbitration. There are two overarching approaches to the agency's involvement in the problems associated with mandated bilateral arbitration. First, it makes the case that administrative agencies can somewhat mitigate the negative impacts by adjusting their enforcement procedures in a compensatory manner. In situations when private recovery is uncertain, agencies may, for instance, rely more heavily on agency-managed recovery funds and disgorgement-style remedies.[1]

Authorities are becoming involved in overseeing arbitration agreements, which includes restricting the use of class waivers or outlawing them in some situations. Congress does not regulate arbitration as it currently exists; rather, the courts, led by the Supreme Court, set the rules, frequently using debatable presumptions regarding the place of litigation, including class action lawsuits, in various regulatory regimes. According to the article, agencies ought to have more regulatory authority than they already have about other institutional players. There are compelling grounds to believe that Congress is less likely to draft final regulations itself than to grant an administrative agency jurisdiction over certain regulatory matters.[2]

Role of Agencies in Addressing Issues with Mandatory Bilateral Arbitration

The function of agencies in resolving the problems caused by obligatory bilateral arbitration is examined in this article. It makes the case that agencies have an institutional function in the existing system that is underestimated and suggests that other institutional players, such as Congress and the courts, should change how they view agencies and give them greater leeway to operate within their potential scope. The criticism of the shift to required bilateral arbitration, which has privatized conflict resolution without adequately protecting the relevant public interests, can be addressed with the assistance of agencies. They offer an additional means of expressing the public's interest in conflict resolution while utilizing authority that is, at the very least, responsible to the public.[3]

Agency participation in arbitration offers another avenue for exercising power that is, at the very least, accountable to the public. This way, the boundaries of a dispute-resolution system that many fear has been subverted to the interests of big business and/or the private sector can be monitored. Concerns about compensation, the rule of law, and deterrents can also be partially addressed by agencies. They can carry out a useful information-gathering role, obtaining pertinent data through sizable staff with committed resources and a higher practical and legal capacity to get confidential data. They have the authority to enforce information-forcing obligations that aid in continuing research on arbitration and offer data on arbitration and arbitration agreements' historical patterns. When private recovery is challenging owing to mandatory arbitration, which is sometimes combined with prohibitions on class actions, agencies may also be able to compensate harmed customers or other parties. Agencies can offer a helpful corrective by directing resources towards damages that are unlikely to be covered by obligatory bilateral arbitration. Agency action can support the ongoing evolution of the law itself, in addition to compensating people and strengthening incentives for following the law.[4]


[1] Shapiro, David L., "Some Thoughts on Intervention Before Courts, Agencies, and Arbitrators." Harvard Law Review (1968): 721–772.

[2] Power, James F., "Improving arbitration: roles of parties and agencies." Monthly Lab. Rev. 95 (1972): 15.

[3] Deacon, Daniel T., "Agencies and arbitration." Colum. L. Rev. 117 (2017): 991.

[4] Engelmann, Jan. "International Commercial Arbitration and the Commercial Agency Directive." A Perspective from Law and Economics, Cham (2017).

  • The article underscores the vital but often overlooked role of administrative agencies in addressing issues arising from mandatory bilateral arbitration.
  • gencies provide a means to safeguard the public's interest in conflict resolution, countering the perceived privatization of conflict resolution through mandatory arbitration.
  • Agencies can partially address compensation and rule of law concerns by leveraging information-gathering capabilities, enforcing obligations, and compensating parties when private recovery is hindered

BY : Vaishnavi Rastogi

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